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stage. (See “Bullish on Europe,” Moneywise, this issue.)
To dig up some solid international investment bets, we stopped at Morningstar’s Website (www.morningstar.net). There we screened for both foreign and global funds. We looked for mutual funds with the best returns over the past three years. And we made sure that our picks handily beat out the average annual 12.7% and 9.0% total returns for global and foreign stock funds, respectively, over the past three years. Finally, we chose funds with no-load fees, expenses that can reduce your return. To cap it off, we picked funds that require no more than a $3,000 minimum initial investment for regular accounts. (IRA accounts will probably require you to pony up only a fraction of that amount, however.)
Needless to say, with Asia in the dumps and much of the world in a precarious spot this year, European funds headed our list, lead by Scudder Greater Europe Growth Fund (ticker: SCGEX). The Scudder fund has posted an average annual total return of 24.77% over the past three years. Second and third places went to European funds as well: the Invesco European fund (ticker: FEURX), which has boasted an average yearly total return of 23.12% the past three years, and the Vanguard European Stock Index (ticker: VEURX), with an average total return of 21.51% during the same period.
The fourth place fund, Janus Worldwide (ticker: JAWWX), is a good choice if you’re looking beyond Europe for opportunities in other corners of the globe, including the U.S., where the global fund is allowed to go fishing to complement its search overseas. The Janus fund’s average annual total return is no slouch, either: 22.0%. Finally, we came up with two runners-up, the Artisan International fund (ticker: ARTIX) a foreign fund which scouts everywhere outside the U.S. for picks and has averaged a 21.48% total return, and the Idex Global C Fund (ticker: IGLCX), which includes American holdings as well as foreign companies, and has had a 21.22% average annual total return over the past three years.
As we’ve said before, if you’re looking for good core-holding quality stocks overseas, there are a few you might look at. MFS analyst Smith says European telecom stocks are a particularly good bet right now. For one, their exposure to events outside Europe, such as in Latin America and Asia, where things are a little rough right now, is very, very low. Meanwhile, the cellular phone market is blazing ahead. The growth of cell phone usage in Europe is currently twice that of the U.S. By 2001, one in two people in Europe will carry a cell phone. “The industry is technologically ahead of the U.S. in many respects,” says Smith. “One for instance is the fact that in Europe, the party making a cellular call pays, not the person receiving the call, which helps increase calling volumes.”
Among Smith’s favorites is Vodafone Airtouch (NYSE: VOD), a company that has been making headlines of late. Originally Great Britain’s cellular power, Vodafone recently reached across